Reciprocal System #581 "The Road to Permanent Prosperity" ch25-Stabilization Methods Ii A

Transcript

all right hello everyone and welcome to my channel this channel emphasizes uh coverage of great theories of everything all-encompassing theories cosmologies Grand unified theories that can help us in our own lives in order to work on our paradigm shift shifting our Awakening to 5D Consciousness and our formation of a whole holistic worldview today is our 581 video that we've done on the reciprocal system of theory which I consider to be the most comprehensive system of theory out there uh it was originated by one dwey B Larson uh back in the 20th century Mr Larsson lived from 1898 until 1990 around 1959 he proposed his two fundamental postulates about how he believed the universe operated and from there derived a theoretical Universe which in some of his books he Compares with the measured actual so-called actual empirical Universe of modern science uh their scientific tables that took armies of scientists and uh trillions of dollars to compile uh Larsson was able to uh reproduce them on his um living room in his living room with a slide rule uh because he has the correct theory about how these things um come to pass yet equations for them you can just plug them right in uh you don't really have to uh do the math if you um you know know the underlying equations um so uh I think that is very compelling about Larson's Theory Larson is a um one of the few scientists to have um founded their cosmology upon a universe of motion the universe is not made out of matter it's not made out of energy it is made out of motion and for Larson motion is the relationship between space and time this implies a reciprocal relationship and all of our scientific quantities are merely fractions with space or time as the numer Ator time or space as the denominator uh space and time can have multiple Dimensions such as matter matter is time to the thir power over space to the third power force is time over space to the second power pressure is time over space to the fourth power electrical capacitance is space to the third power over time uh and so on and so forth uh every one of our scientific quantities has their kind of their space-time coordinates like that Larsson ended up writing books on many of the scientific subjects uh especially chemistry astronomy and physics um but he also his final book was on metaphysics uh which included sections on philosophy and religion biology psychology and LaRon uh in his spare time wrote two books on economics the first one is called the road to Full Employment and the second one is called the road to permanent prosperity and that's the book that we're looking at today uh and have been for the last 7 weeks or so so if you want to uh get in on the start of this book go back to the um in the archives about seven weeks but uh today we're about to read uh from chapter 25 which is called stabilization methods 2 and uh this book only has 26 chapters so we're almost done getting close to the end and this is where Larson uh cuts to the Chase and you know explains what he plans would plan to do to arrive at an economic system that is going to generate permanent Prosperity um lson tackles the economic um system the same way that he tackles the physical systems uh through scientific approach um and a dynamic approach based upon motion and reciprocity the two reciprocal aspects of the economic system are production and consumption and Larsson arrives at 17 different principles that are mathematically exact about um various aspects of the economy and he uh creates a flowchart which is listed in the thumbnail um about uh how the dynamics of the um economic system uh can be mapped out now if you would like a description a detailed more detailed description of how the reciprocal system of theory operates um kind of in the abstract from the fundamental postulates to uh deducing a theoretical Universe check out some of my uh first 474 videos on this subject where I go into it a little bit deeper every one of them is a little bit different uh I I tried to make it so that each one of them has a little bit of a wrinkle that uh hasn't been discussed in any of the other ones um so that you could watch you could theoretically watch all 474 of them and hopefully get something new out of each one um don't know if I did that I would love for somebody to uh watch them all and and let me know um but otherwise we're going to start up here with chapter 25 stabilization methods too from dwey B Larson's road to permanent Prosperity since we have found that economic instability is primarily a matter of unstable market price levels due to a lack of balance between the two economic streams entering the markets uh the stream of goods on one hand and the stream of money purchasing power on the other two possible methods of control to achieve stability immediately suggest themselves one control of the goods stream or two control of the Purchasing Power Stream as indicated in the discussion in the preceding chapter however control of the stream of goods is Not Practical nor would it be desirable from an overall standpoint even if it were practic iCal this leaves the control of the Purchasing Power Stream by compensatory Reservoir transactions as the only immediately obvious answer to the problem it was demonstrated in the last chapter that government fiscal operations provide us with the kind of a money purchasing power Reservoir that can be manipulated for control purposes a counter cyclical fiscal program of the kind outlined in that discussion is not without its disadvantages however the principal argument that has been Advanced against it in the past is that so many delays will probably be experienced that the controls are unlikely to be applied at the right time J me assess the situation in this manner quote some delay between any undesired disturbance and the corrective action is inevitable first there will be a delay between the occurrence of the initial change and its realization by the authorities secondly there will be some constitutional administrative and political causes for Play Between the realization of the initial change and The Taking of the counter measures by the authorities and thirdly there will be some delay between the taking of the countermeasures by the authorities and the full development of the actual effects of these counter measures upon the economic situation the clarification of the nature and operation of the business cycle in the preceding Pages points the way to elimination of a large part of this delay with the benefit of this new information there should no longer be any difficulty in recognizing an inflationary or deflationary Trend as soon as it appears and with a control program that modif I the stream flowing to the markets by direct additions or withdrawals of money purchasing power there should be no delay in getting the full effects of the control measures but delays of an administrative or political nature will be more difficult to eliminate and unless there is a rather widespread understanding of the theoretical aspects of the compensatory fiscal policy it is not unlikely that some essential element of the program may be omitted or Modified by political pressure to the point where it is ineffective one of the major obstacles to the introduction of a fully effective economic control program based on government FIS fiscal policy is the existence of a school of thought which holds that tax cuts are good for the economy at any time that they stimulate business and and thereby increase governmental revenues enough to offset the revenue lost by reason of the lower tax rates hence they quote cost nothing like all other schemes for getting something for nothing this idea has great appeal to those who are unable to look behind the false front and see the fallacy on which it is based but something for nothing is always an illusion no matter how attractively it is packaged it is generally recognized that tax reductions in the face of constant or increasing government expenditures have the potential of causing inflation Nations all around the world are giving practical demonstrations of this fact every day but The Advocates of those of these reductions contend that inflation is not a necessary result and that it can be prevented by taking direct action against any inflationary developments for instance both the Kennedy and Johnson administrations reacted violently against efforts of basic Industries to raise prices on occasions when inflationary Trends were developing and both administrations felt that they had won significant victories by compelling The Producers to resend the price increases temporarily what the government officials and their economic advisers fail to see is that tax reductions that are not accompanied by corresponding reductions in government expenditures or by non-inflationary borrowing are inherently and hence inevitably inflationary bar borrowing from the banking system is inflationary because the banks normally obtain new money from the Federal Reserve to replace the amount loan to the government by purchase of Securities and this new money or a large part of it adds to the flow in the circulating Purchasing Power Stream borrowing from individuals is not inflationary because these transactions do not change the total money purchasing power the purchasing power of the individuals who buy the government bonds is decreased by the same amount that the purchasing power of the government is increased borrowing from foreign sources is also non-inflationary because it has no effect on the domestic Purchasing Power Stream but in this case the non-inflationary status is only temporary as sooner or later the foreigners will want real values that is Goods instead of paper and these Goods have to be diverted from the stream going to the domestic markets resulting in inflation of the price level Redemption of the bonds sold in the domestic Market does not produce a similar inflation as in this case the government has to Levy taxes to raise the money with which to redeem the bonds and The Total Money purchasing power is not altered when spending in real terms remains unchanged every dollar added to disposable income by reason of lower tax rates means $1 increase in the price of goods once the tax cuts have been made the price rise cannot be avoided as brought out in chapter 10 Direct Control of the general price level is mathematically impossible any control of the prices of some item simply raises the prices of other items however beneficial the actions of the Kennedy and Johnson administrations in blocking price increases in some individual items may have been politically they were nothing but futile gestures from the economic standpoint however the direct connection between government fiscal operations and the market price level that makes inflation the normal consequence of government deficits is not only an obstacle standing in the way of the dreams of getting something for nothing uh is not only an obstacle standing in the way of getting something for nothing it also has a positive aspect in that it provides us with a tool that can be used for economic stabilization in this connection it should be recognized that it is the inflationary or deflationary aspect of these operations that affects prices a tax cut does not in itself inflate prices if it is a company by a corresponding reduction in expenditures as is so often recommended the nation may be better off as a result of this combination of actions if the reduction of expenditures is achieved by genuine economies and not by elimination of needed projects and activities but the additional buying that the taxpayers are now in a position to do merely replaces the spending that the government has eliminated and if the flow of money purchasing power to the markets was inadequate before the tax cut it remains inadequate a tax cut is of value as a business stim uh stimulator only by reason of what it accomplishes in the way of creating a government deficit furthermore it is not even sufficient just to create a deficit it must be an inflationary deficit as brought out in the preceding paragraphs if the deficit is financed by non-inflationary borrowing the total available money purchasing power remains unchanged and the tax cut has no effect on General business conditions it is not the tax cut that stim stimulates business it is the inflation money inflation stimulates business because it subsidizes business profits at the expense of the consumers if the tax cut is so handled that it does not in uh produce inflation then there is no increase in profits and no stimulation this is another illustration of the no free lunch principle if the tax cut does not produce inflation no one is paying the bill and consequently no one gets any benefit from a technical standpoint flexible tax rates constitute a very effective stabilization tool we must recognize however that variable tax rates have a serious disadvantage in that the required manipulation is too conspicuous even even at best the general public cannot be expected to understand all of the intricacies of purchasing power stabilization and so there will inevitably be public pressure tending to favor increased government borrowing beyond the actual needs when borrowing is in order and to resist the liquidation of outstanding debt when the technical position calls for an input into the reservoirs this is not necessarily an insurmountable obstacle if no other adequate control measure were available it would be entirely possible to go ahead with a variable tax program either on the basis of overriding whatever resistance May develop or preferably by accompanying the program with an educational program to promote a better public understanding a suggestion that has been made to minimize the public opposition that is likely to develop when tax increases are required is to separate the stabilization tax or rebate from the normal taxes so that the taxpayers will realize that the amount of this special tax or rebate is merely a temporary adjustment and will sooner or later be offset by an equivalent adjustment in the opposite direction in its original form this proposal contemplated an entirely separate tax the idea being to level a tax on all retail sales when the price index exceeds a certain standard and to make a corresponding rebate on sales when the index Falls below the standard by a given percentage in the light of the information developed in the preceding Pages it is apparent that this proposal in its original form is unsound as any attempt to maintain a fixed price level is detrimental to the economy it could however be modified to operate on the basis of the condition of the money and credit reservoirs levying the tax when the excess of the reservoir transactions is outward and applying the rebate when there is a net inflow the central idea of this plan that of clearly identifying the stabilization component of current rate current taxes so that the taxpayer would realize that whatever gain or loss May thereby accur to him is only temporary has considerable Merit however ever a wholly separate tax is not essential for this purpose the expense and inconvenience of a separate tax system could be avoided by applying the stabilization tax or rebate as a percentage of the income tax computed on the regular basis in this form the proposal should be feasible both technically and politically it is true true that there is no real difference between an increase in the tax rate and an equivalent percentage ctax applied to the normal taxes but the obstacle to be overcome is psychological and there is a psychological difference between the two methods of handling the situation the general reaction to the news that taxes are to be raised is quite quite unfavorable but once the public becomes accustomed to a regular adjustment which is downward as often as it is upward the necessary changes will in all probability be accepted as a matter of routine nevertheless in spite of all that can be said in favor of tax adjustments as a means of economic control and regardless of what may be done to make make those adjustments more palatable to the taxpayers it is clear that an unobtrusive primary method of control would be advantageous if such a method is available in making a detailed examination of the possibilities along this line we find that there is another alternative in addition to the two general methods of stabilization previously discussed control of the good stream or control of the purchasing power stream the third alternative is to equalize the flows by interchanging goods and purchasing power and diverting enough from one stream to the other to bring about une equality at first glance this may seem absurd as conversion of wheat to dollars or anything of that nature is obviously impossible but even though it is not possible to convert real Goods to money it is possible to convert credit Goods to credit money and vice versa since both of the streams entering the markets contain substantial amounts of credit instruments it is entirely feasible to meet an inflationary Threat by withdrawing credit money from the Purchasing Power Stream converting it to credit goods and injecting these Goods into the good stream flowing to the markets in order to counter deflation all that is necessary is to reverse this action so far as the primary objective is concerned it makes no difference whether the control uh measures are applied to to one stream alone or involve diversion from one stream to the other either method is capable of equalizing the flows in the two streams and that is all that is required for stability The Interchange between credit goods and money does however have some practical advantages that warrant serious consideration one of these is is that The Interchange is twice as effective as a corresponding unilateral transaction if the inflationary unbalance is a million dollar per day for example a million dollar per day must be withdrawn from the Purchasing Power Stream in order to maintain an equilibrium of this kind of a transaction alone but a half million dollar of credit money withdrawn daily from the Purchasing Power Stream and injected into the good stream in the form of credit Goods will accomplish the same purpose another major advantage is that no one gains or loses by the transaction even temporarily and this program therefore avoids the possible adverse public reaction that constitutes the strongest objection to control by means of government fiscal operations fluctuations in the Disposable incomes of the individual taxpayers such as those that would result from the operation of a flexible tax system are not only objectionable in themselves but as has been pointed out are a constant threat to the successful handling of the control mechanism as there will always be political pressure for more liberal tax reductions when reductions are in order and a resistance to tax increases when increases are in order unless the authorities are more callous toward this political pressure than government officials can normally afford to be there is a hazard of destroying the effectiveness of the system The Interchange between credit goods and credit money on the other hand is a balanced transaction from the standpoint of the individuals concerned there will have to be a small price differential to enable the transactions to be carried out when and in the amounts needed but aside from this each participant simply exchanges one asset for another of equal value an important consequence of this fact that there will be no substantial gain or loss to anyone is that the control transactions can be carried out as routine business dealings without attracting the widespread public attention that is given to increases and decreases in taxes this is a definite Advantage particularly in the early stages of the operation of the control system when its Effectiveness is still questioned by Skeptics as a public adver advertisement of the intention of the government to take steps to combat inflation is in itself likely to have an inflationary effect of course a fully effective control program should be able to handle any situation that may develop but nevertheless it is clearly desirable to keep the load on the control system as low as possible and for this reason it is helpful to keep as much as possible of the manipulation behind the scenes the Federal Reserve System already has the legal power to operate a control program of the kind suggested one of the powers granted to it by existing laws is that of buying and selling government obligations and certain other classes of Securities in the open market for the purpose of carrying out the policies established by the Federal Reserve board before 1922 these Powers were exercised in a rather halfhazard and unorganized fashion by the separate federal reserve banks but by this time the potential of these open market operations was beginning to be more clearly realized and a new policy was adopted which put the execution of the program in the hands of a general uh Central Committee in the period from 1922 to 1927 the open market Powers were used on several occasions with uniformly favorable results and the banking authorities became convinced that they had found at least a partial answer to their stabilization problems the 1929 action however was not well timed and accentuated an inflationary tendency already underway as a result the sale of Securities had to be undertaken in 1928 1929 to stem the rising tide of speculation and inflation but to the dismay of those who had regarded the open market operation so optimistically this action had little apparent effect even though it was carried to the point where the supply of Securities on hand was practically exhausted after the stock market crash in the fall of 1929 buying was begun and large purchases were made throughout most of the decline again with little or no visible results as expressed by expressed by W Randolph Burgess of the New York Federal Reserve Bank from 1922 to 1927 the response to relatively small changes in Federal Reserve policy were extraordinary but in 1928 1929 and later